A landscaping company is considering renting a backhoe at $12,000 for the season

Question

A landscaping company is considering renting a backhoe at $12,000 for the season. The variable cost of completing a landscaping project with the use of the backhoe is $500. Alternatively, without the use of the backhoe, the company would incur a variable cost of $1,000 per landscaping project and no fixed costs. If the landscaping company plans to complete more than _____ projects, the total cost of landscaping projects will be lower _____. 12; without the backhoe 44; without the backhoe 24; with the backhoe 18; with the backhoe A landscaping company is considering renting a backhoe at $12,000 for the season. The variable cost of completing a landscaping project with the use of the backhoe is $500. Alternatively, without the use of the backhoe, the company would incur a variable cost of $1,000 per landscaping project and no fixed costs. If the landscaping company plans to complete more than _____ projects, the total cost of landscaping projects will be lower _____. 12; without the backhoe 44; without the backhoe 24; with the backhoe 18; with the backhoe

Explanation / Answer

Answer

option

24; with the backhoe

total cost =fixed cost +variable cost

variable cost=cost per project*number of project

TC without the backhoe

for 12 projects

=12*1000=12000

for 24 projects

=24*1000=24000

for 44 projects

=44*1000=44000

with the backhoe

for 12 projects

=12*500+12000=18000

for 24 projects

=24*500+12000=24000

for 44 projects

=44*500+12000=34000

for 24 projects the cost is same and above it decreases with the backhoe

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